Gold on track for 1% fall after lacklustre week, while its ratio to silver and platinum eases
LONDON — Gold prices held near $1640 an ounce on Friday, supported by an uptick in the euro versus the dollar, but momentum was weak as investors took to the sidelines to await further news on the euro-zone crisis and US monetary policy.
Spot gold was down 0,1% at $1641,11 an ounce at 1.46pm GMT, while US gold futures for June delivery were up $1,50 at $1642,90. Prices are on track to fall 1% this week despite holding within their narrowest weekly range in more than a year.
"Conflicting statements from European Central Bank council members, which are fuelling speculation against some southern European countries, and the rumours we had yesterday that France would be downgraded are all weighing on risky assets," Quantitative Commodity Research consultant Peter Fertig said.
"Gold is traded as a risky asset, not a safe haven. Currently the safe havens are US Treasuries and German bonds," he said.
A well-received reading of the German business climate lifted the euro and boosted European stocks, reflecting a cautiously optimistic tone to the markets.
However, the bond markets reflected growing concerns over the euro zone, with Spanish 10-year yields breaking back above 6%, driving German Bund prices to record highs.
Gold is struggling for direction as buyers await the outcome of International Monetary Fund and World Bank meetings this weekend, at which plans to tackle the euro-zone debt crisis will be discussed, and a US Federal Reserve meeting next week.
Washington is hosting meetings of the Group of 20 countries and the semiannual meetings of the IMF and World Bank this weekend. The IMF will be bidding for a funding boost to handle the euro-zone debt crisis.
Russia said G20 countries were ready at the meeting to commit enough funds to fulfil IMF chief Christine Lagarde’s request for at least $400bn to draw a line under the euro-zone crisis.
PHYSICAL BUYING WEAK
Appetite for physical gold in India, historically the world’s number-one bullion consumer, was lacklustre ahead of the key gold-buying festival of Akshaya Tritiya on Tuesday, as high prices and rupee weakness curbed interest in the metal. The rupee hit a three-month low versus the dollar earlier.
"Physical demand is currently underwhelming — barely even blinking when prices dipped below $1640 yesterday — and this hardly offers any assurance that gold can easily find support on any further price drops," UBS said in a note.
"Appetite from India has fallen off from the strong level we took note of earlier in the week, keeping with the trend of strong days being followed shortly by a series of ordinary days," it added. "In the context of next week’s significant Akshaya Tritiya festival, this is somewhat worrying."
Silver was down 0,1% at $31,70 an ounce, while spot platinum was down 0,1% at $1573,74 an ounce and palladium was up 0,8% at $664,75 an ounce.
Gold’s ratio to platinum and to silver has edged lower this week as it has underperformed. One ounce of gold now buys 51,7 ounces of silver, down from 52,7 a week ago, and 1,04 ounces of platinum, against 1,05 ounces last Friday.
"Silver, platinum and palladium are currently under pressure due to their industrial characteristics, but should also increase again over the course of the year," Commerzbank said in a note.
